Old Chang Kee Singapore gross profit rose 3.7% to $13.4m in Q3
The Group’s revenue increased to approximately S$22.2m for the period from 1 October 2017 to 31 December 2017, an increase of approximately S$2.0m or 9.6%.
Cost of sales have surged by 9.6% to $22.2m from $20.3m of the previous year. Revenue from retail outlets increased by approximately S$1.9m or 9.3% mainly due to revenue
contribution from new outlets and increase in revenue from existing outlets, partially offset by the absence of revenue in 3Q2018 from closed outlets. Revenue from other services, such as delivery and catering services, increased by approximately S$0.1m or 36.2%, mainly due to higher events and catering sales.
As at 31 December 2017, the Old Chang Kee operated a total of 92 outlets in Singapore as compared to 88 outlets as at 31 December 2016. The Group’s signature puff products remained the major contributor to its revenue and accounted for approximately 28.1% of the Group’s revenue in 3Q2018, as compared to approximately 32.7% in 3Q2017. Cost of sales increased by approximately S$1.5m or 20.0% mainly due to the higher revenue generated by the Group and higher raw material cost for 3Q2018.
The Group’s gross profit increased by approximately S$485,000 or 3.7%. The Group's gross profit margin decreased from approximately 63.8% in 3Q2017 to 60.4% in 3Q2018, mainly due to higher raw material cost.
The increase in other expenses of approximately S$59,000 in 3Q2018 was mainly due to an increase in assets written off of approximately S$186,000, mainly due to outlet closures, offset by foreign exchange gains of approximately S$140,000 primarily on Malaysian Ringgit denominated loans to a subsidiary company.
As a result of the above, total operating expenses increased by approximately S$736,000 or 6.4%. Total operating expenses amounted to approximately 54.7% of revenue in 3Q2018 and 56.3% in 3Q2017 respectively.
The Group’s first flagship outlet in central London, United Kingdom is on track to open in 2018, generating new revenue streams for the Group and uplifting Old Chang Kee’s brand positioning.
On the current operations, the Group expects rental, labour and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labour market will continue to remain tight.
Following completion of the new factory facilities and the commissioning of new factory equipment, the Group will be focusing its efforts on improving its gross margins and revenues. These efforts include continuing investment in brand positioning such as the Group’s sponsorship of the movie ‘Ah Boys to Men 4’, bulk purchases at more favourable prices with the expanded factory space, further expanding its product range and increasing the production efficiency of its factories, in order to grow the business both locally and regionally.
